Succession Planning

Succession & Disaster Plans for Law Offices

Michael

My sense is that many Vermont law offices use the summer to review office practices & procedures. Whether you do or do not, it’s never a bad time to plan for disaster.

In the early days of this blog, it wasn’t uncommon for me to write about succession planning.  The posts did not focus on selling or transitioning a firm to new ownership.  Rather, he posts urged sole practitioners and lawyers in very small firms to adopt plans that would protect clients in case of a lawyer’s unavailability. Indeed, preparing for unavailability is an aspect of Rule 1.3’s duty of diligence.  Comment [5] states:

  • “to prevent neglect of client matters in the event of a sole practitioner’s death or disability, the duty of diligence may require that each sole practitioner prepare a plan, in accordance with applicable rules, that designates another competent lawyer to review client files, notify each client of the lawyer’s death or disability, and determine whether there is a need for immediate protective action.”

Of course, emergencies, tragedies, and calamities aren’t reserved for smalls and solos.  So, a few years ago, I posted Is your firm prepared for a disaster?  I did so in response to the ABA Standing Committee on Ethics and Professional Responsibility release of Formal Opinion 482: Ethical Obligations Related to Disasters.  In the post, and as I’m wont to do, I used imagery to highlight the key takeaway from the opinion:

Or, as the ABA Committee reminded us with words:

  • “Lawyers must be prepared to deal with disasters. Foremost among a lawyer’s ethical obligations are those to existing clients, particularly in maintaining communication. Lawyers must also protect documents, funds, and other property the lawyer is holding for clients or third parties. By proper advance preparation and taking advantage of available technology during recovery efforts, lawyers will reduce the risk of violating professional obligations after a disaster.”

In March 2022, the ABA Journal posted What’s the worst that could happen? ABA Techshow attendees role play law firm disasters.   The article recounts scenarios that the presenters used during a seminar entitled “Ethically Managing Modern Emergencies: Are You Ready?” I recommend the post for any office or firm interested in exercises that might help to prepare for a variety of disasters. I’m particularly a fan of the trust account scenario.[1]

A few states require sole practitioners to file succession plans with regulators.  I’ve not yet proposed such a rule here, but I’m considering it. I’ve witnessed the chaos that can result when, for whatever reason, a lawyer is suddenly unavailable and, because everything important was stored in the lawyer’s head, nobody knows how to take even the most basic steps to protect clients.

Anyhow, I doubt the phrase originated with basketball coaches, but it’s one that we use a lot:  failing to plan is planning to fail.  The same can be said for lawyers and law firms, including when it comes to disasters.

As always, let’s be careful out there.

[1] For more on creating a succession or disaster plan, check out the Vermont Bar Association’s Practice Resources page

Got Plans?

Michael

Recently, a lawyer let me know that she’d updated her succession plan after reading a question in the #fiveforfriday quiz.  I don’t have kids, but if I did, the lawyer’s note made me feel like I imagine I would after my kid scored his or her first basket. It was a proud moment for bar counsel.

Speaking of first baskets, one of the first baskets I ever scored came as a 5th grader playing for the Warriors in the SB Rec League.  Much like current Golden State Warriors Steph Curry & Kevin Durant, I too wore sneakers when I played basketball.  Unlike them, I scored the aforementioned basket in the wrong hoop.  That’s right.  In the first game of the season, I grabbed the opening tip, sped down the court, and banked it in with perfect form — only to give the other team a 2-0 lead.  At the end of the first quarter, we’d cut it to 2-1 as a result of foul shot I made in the correct basket.  As my Dad loves to tell anyone who may or may not care, “At the quarter, Michael had all the points!”

My coach had not successfully planned for what to do if the ball bounced to me off the opening tip.  Proof positive that no detail is too unimportant.

Which gets me back to succession plans.

Rule 1.3 requires lawyers to provide clients with diligent representation.  I used the question that eventually prompted the lawyer to update her succession plan to call attention to Comment [5] to Rule 1.3.   

  • “To prevent neglect of client matters in the event of a sole practitioner’s death or disability, the duty of diligence may require that each sole practitioner prepare a plan . . . that designates another competent lawyer to review client files, notify each client of the lawyer’s death or disability, and determine whether there is a need for immediate protective action.”

I’m not positive, but I think the language in the Comment can be traced back to ABA Formal Opinion 92-369.  The opinion outlines the duty to prepare a succession plan, as well as the duties of the successor lawyer.

For those of you interested in creating a succession plan, one of the best resources I’ve found is the Washington State Bar Association’s resource page.

And, here are some practical tips, based on situations I’ve encountered as both disciplinary and bar counsel:

  • After creating a succession plan, make sure someone knows where it is.
  • Update it if the successor lawyer dies, retires, or moves.
  • Include directions for someone to find a list of the passwords for your computers, devices, electronic calendaring system, e-mail, and voice mail.
  • Update the list as you change your passwords.
  • Meet with your financial institution to discuss who will be authorized to make trust account disbursements.

My 5th grade coach’s failure to make sure I knew which basket to shoot at was excusable.  A lawyer’s failure to plan to protect clients’ interests in the event of the lawyer’s unexpected unavailability is not.

Lawyers often advise clients to plan.  We need to take our own advice.

Remember, planning to plan is not a plan.

Got Plans

Monday Morning Answers – #84

Michael

Happy Labor Day!

Friday’s questions are HERE.  The answers follow today’s Honor Roll

Thanks to all who offered encouragement in Saturday’s race.  It went well and the Clemson game was fantastic.  Watching the Tigers “touch the rock” and run down the hill for the first time since last year’s national championship was electric.   And we didn’t have bad seats:

IMG_2512

Honor Roll

Answers

Question 1

The rules do not require lawyers to have succession plans. However, a comment to a particular rule suggests that it’s a violation for a sole practitioner not to have a plan that designates another lawyer to review the solo’s files and contact the solo’s clients in the event of the solo’s death, disability, or unavailability.  It’s the rule on:

I used this question as a reminder following Hurricane Harvey.  Remember – there are many ways in which a solo might become unavailable.  Seminars often focus on the doom & gloom of death or disability.  Yes, those things happen.  But, if you’re traveling and a weather emergency keeps you from getting home for a few extra days, can your clients make it without you?

Question 2

Valerie and Eddie divorced many years ago.  Eddie is over a year in arrears on court-ordered spousal maintenance payments.

Valerie asks Lawyer to represent her in a motion to enforce the order.   She cannot afford Lawyer’s fee and asks Lawyer to take the case on a contingent fee basis.  Lawyer agrees.  You may assume that Lawyer does not have any conflicts that prohibit Lawyer from representing Valerie.

Which is most accurate?

  • A.   If the contingent fee agreement is reasonable & reduced to writing, it does not violate the rules.  V.R.Pr.C. 1.5(d)(1)(i)
  • B.   Lawyer has violated the rules.  Contingent fees are banned in domestic cases.
  • C.   There will not be a violation unless or until Lawyer attempts to collect a contingent fee from Valerie.
  • D.   There is no violation because it was Valerie, the client, who proposed the contingent fee.

Here’s a very simple way to help provide access to legal services: the rules clearly allow contingent fees in certain post-judgment family cases.  Rule 1.5(d)(1)(i) allows them in cases involving past due maintenance & property division, while subsection d(1)(ii) allows contingent fees, with court approval, when child support is past due.

DO NOT say to me “but Mike, I’ll never make a difference with access by taking a post-judgment spousal maintenance case on a contingent fee.”   You will make a difference to that client.  And, while this is likely best addressed in a blog of its own, my opinion is that, as a profession, we too often let perfect be the enemy of the good.  Instead of forming commission after study commission after blue-ribbon commission, we should strive make a  difference whenever and wherever we can, no matter how small “whenever and wherever” seems.  Like to the one client who you represent on a contingent fee basis in a post-judgment matter where court-ordered spousal maintenance is past due.

Question 3

Lawyer represents Organization.  Lawyer leaves Organization for private practice.

True or false:   Lawyer’s general knowledge of Organization’s practices and procedures ordinarily will preclude Lawyer from representing a party adverse to Organization.

False.  See, V.R.Pr.C. 1.9, Comment [3].  As Professor Alberto Bernabe puts it, “being familiar with the organization’s ‘playbook’ does not typically disqualify the lawyer.”

Question 4

Rule 8.4 prohibits some types of conduct that do not involve the practice of law.  Although it no longer appears in the text of the rule, what’s the 2-word term used to draw the distinction between non law-related conduct that violates the rules and non law-related conduct that does not? Conduct involving ” ________  ___________.”

“Moral Turpitude.”  V.R.Pr.C. 8.4, Comment [2].  A phrase that drove me nuts in the old days!  Professor Bernabe has some great posts on the continued use of the phrase in the rules.

Question 5

This is a fictional scenario.  A prop device, if you will.  Play along.

I received an ethics complaint from a woman complaining how her brother was treated in a criminal case.  The thrust of her complaint was that her brother was framed for the murder of his best friend, Andy, who had just confessed to an affair with her brother’s “cheatin’ wife.”

Referring to her brother’s defense attorney, she wrote that her brother never should’ve “trusted his soul to no backwoods southern lawyer.”  She alleged that the proceeding was “a make believe trial” and that the “judge in this town has got blood stains on his hands.”

Interestingly, her brother WAS framed! In fact, the sister is the one who did it! Not only did she admit to killing Andy, she wrote that her brother’s “cheatin’ wife had never left town and that’s one body that’ll never be found.” It’s the first complaint I’ve ever received in which the complainant confessed to a crime.

Anyhow, Vermont’s Professional Responsibility Program and Judicial Conduct Board don’t have jurisdiction over the defense attorney and judge.

Name the state to which I referred the complainant.

Georgia.  The question refers to the AM smash The Night Light The Lights Went Out in Georgia.  After Liza Minelli and Cher turned it down, one-hit wonder Vicki Lawrence took it to #1.  As a few readers mentioned, once the title-line gets in your head, good luck getting it out.

Finally, Friday’s questions included a reference to Johnny I Hardly Knew Ye by The Irish Rovers.  My apologies to the (several) readers who prefer The Dropkick Murphys’ version.

 

Success

Michael

Did I say success?  Oops. I meant to say “succession.”  Be prepared to yawn & roll your eyes: this post is about Succession Planning.

Some background.

In 2009, the Vermont Supreme Court adopted a series of amendments to the Rules of Professional Conduct.  Among the changes, the addition of Comment 5 to Rule 1.3.  I’m sure each and every one of you just thought to your self “self, rule 1.3…the rule on diligence.”  Good job.

Rule 1.3 requires an attorney to act with reasonable diligence and promptness when representing a client.  Comment [5] states:

  • “To prevent neglect of client matters in the event of a sole practitioner’s death or disability, the duty of diligence may require that each sole practitioner prepare a plan, in conformity with applicable rules, that designates another competent lawyer to review client files, notify each client of the lawyer’s death or disability, and determine whether there is a need for immediate protective action.”

In 2011, I sent this memo the bar.  Shortly thereafter, Mary Ashcroft, Jim Knapp, Kevin Ryan and I embarked upon a series of CLEs on Succession Planning.  Attendance was great.  However, most who attended were much more interested in how to sell a law practice than in matters related to preparing a succession plan.

Yes, it’s important to put significant thought into selling a practice and transitioning out of practice. However, what Comment 5 and I want you to think about is what I’ve jokingly called a “semi plan.”  What will happen to your practice if you walk out the door tonight and get hit by a semi?  As a profession, we spend a lot of time advising others on how to plan for the future.  We need to do the same.

An email from my friend and colleague Josh Simonds prompted the idea for this post.  I’m going to chat with the VBA’s Jennifer Emens-Butler about reprising the CLEs.  In the meantime, from my perspective, the key to a succession plan is this: in the event of your death, disability, or unavailability,  is your successor agreeing to step in to represent your clients, or, is your successor inventorying your files and practice in order to protect your clients’ interests?

You’re free to set up either type of succession plan.  From what I’ve read and heard, I suggest the latter. But, do some research.

I’ve often referred to the New York State Bar’s Planning Ahead Guide which is HERE. The Cal State Bar has published some guidance.  It’s HERE.  The Washington State Bar Association has published this.

Failing to plan is planning to fail.  I know none of you plans to fail.  So, consider a plan.

That would be success.

 

Succession Planning: can your clients make it without you?

Michael

Many of you spend a lot of time advising your clients to prepare for the worst. Have you taken the time to protect your clients if the worst happens to you?

An unexpected diagnosis. A car accident. A skiing mishap. What if you had been away during Hurricane Irene, unable to return to Vermont for that trial, or that deposition, or that closing?

No matter the reason, what if you are not available? Will your clients be protected?

Does anyone know where your files are? Or where you keep your schedule and deadlines? Or the password to your cloud storage platform?  Or how to access your trust account?

Rule 1.3 of the Vermont Rules of Professional Conduct requires lawyers to act with reasonable diligence while representing a client. Comment 5 to Rule 1.3 states that “to prevent neglect of client matters in the event of a sole practitioner’s death or disability, the duty of diligence may require that each sole practitioner prepare a plan, in conformity with the applicable rules, that designates another competent lawyer to review client files, notify each client of the lawyer’s death or disability, and determine whether there is a need for immediate protective action.”

Among other things, a sound succession plan will help to ensure that:

1. deadlines will be met.

2. disbursement of funds held in trust will not be delayed.

3. client files and property will be located and safeguarded.

4. clients are protected.

The Vermont Bar Association has presented seminars on Succession Planning.  To review a seminar by DVD, go to this list and look for Seminar ID #483.  You might also want to review this helpful guide from my colleagues at the Washington State Bar Association or this article from Mark Bassingthwaighte of ALPS.